(Guest Post)
If you want to purchase something but don’t currently have the money in your main bank account, using a credit card can prove extremely useful. If you use your plastic sensibly, it can be well worth having around. However, some people struggle to know how best to use theirs, which can lead to overspending. Here are a few tips to help you avoid spending more than you need to and potentially landing yourself in a difficult financial situation.
Pay your balance in full
Whenever possible, try to pay off the full balance of your credit card bill each month. You do, of course, have the option of only paying a percentage, but the remaining amount will then roll over to the next month and most likely see interest charges added.
Pay your bill on time
Missing a credit card bill payment, even by just a couple of days, can harm your credit rating. This might make you less likely to be accepted when you apply for credit cards with lower interest rates, or a mortgage, in future. Therefore, it’s well worth arranging a direct debit to cover at least the minimum repayment each month. This should see your credit rating boosted, which is never a bad thing.
Use it only for bigger buys
Unless you have a 0 per cent credit card and are particularly well informed about the practice of stoozing it’s best to avoid using your card for day-to-day purchases. Instead, it may be better to see it as a way of making bigger purchases like household improvements, cars and holidays that you can then pay off in time. Viewing your credit card as something to fall back on might help you to avoid racking up a bill you hadn’t accounted for.
Leave your card at home
The easiest way to avoid unnecessary use of your credit card is to leave it at home! This means you won’t be able to make impulse purchases using it even if you wanted to. While this might seem frustrating, it will at least provide you with a little bit of time to consider whether you really do need that new pair of shoes.
Know your limit and stick to it
Every card comes with a limit – this is typically based on your credit rating and may vary depending on your lender. It’s wise never to exceed this as you’ll be hit with additional charges that will soon mount up. Why not also think about how much of the maximum your income realistically allows you to pay back each month and making sure you never go beyond it?